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Regulating a monopolist with unknown costs and unknown quality capacity

By Charles Blackorby and Dezsö Szalay


We study the regulation of a firm with unknown demand and cost information. In contrast to previous studies, we assume demand is influenced by a quality choice, and the firm has private information about its quality capacity in addition to its cost. Under natural conditions, asymmetric information about the quality capacity is irrelevant. The optimal pricing is weakly above marginal costs for all types and no type is excluded

Topics: HF
Publisher: University of Warwick, Department of Economics
Year: 2008
OAI identifier:

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